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Full text of "Rapid Population Growth Consequences And Policy Implications"

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THE "RESIDUAL" AND THE  ACQUIRED QUALITY OF LABOR
Research carried out by economists in the last 15 years suggests that, for the most part, growth cannot be explained by increases in the traditional inputs of capital, land, and labor. Although most of this research has been carried out in developed countries, studies by Kuznets refer to periods when the developed countries were relatively underdeveloped.
What has been called the "residual"—that part of economic growth that cannot be explained by increases in traditional inputs—comprehends most of the economic growth that takes place. This finding is of great importance. This paper will argue that it is a critical element in any reinterpretation of the neo-Malthusian viewpoint, or of any set of relations between population and resources, or on the impact of population growth on economic development. (Although there has been considerable speculation about the nature of what we may call the "residual" inputs and although we know with some degree of definiteness what some of them must be, we cannot say what all of them happen to be.)
According to Kuznets (1), no more than 10 percent of the growth rate (in a number of European countries, Australia, and Japan) can be accounted for by the traditional inputs.* Kuznets concludes
... that the direct contribution of man-hours and capital accumulation would hardly account for more than a tenth of the rate of growth in per capita product—and probably less. The large remainder must be assigned to an increase in efficiency in the productive resources—a rise in output per unit of input, due either to the improved quality of the resources, or to the effects of changing arrangements, or to the impact of technological change, or to all three.
There are a number of studies of the residual. For the most part they concern advanced countries, and the results are frequently less extreme than those found by Kuznets. Nevertheless, it is rare that less than 50 percent is explained by the residual. Traditional inputs explain less than one half, and frequently considerably less than one half, of the growth, t
In addition, some recent studies suggest from a different angle that capital accumulation is relatively unimportant as a contribution to growth. (We
*Although the countries used by Kuznets are today developed, the starting period of the analysis (e.g., Norway 1865-74) frequently goes back to a time when they were relatively underdeveloped.
TA number of these studies are summarized in the O.E.C.D. Journal, Productivity Measurement Review. See especially (2, 3).
A recent fascinating paper by Krueger (4) shows "that three variables normally associated with the concept of human capital can explain more than half the difference in